Avoid Financial Issues Later

As of April 22, over 70 million people used tax professionals to file their individual tax return forms and over 62 million people self-prepared their taxes, according to statistics from the Internal Revenue Service.

Regardless of how you submitted the forms, Mark Zinman, managing partner at Pennsylvania-based Zinman and Company, a full-service accounting and advisory firm, encourages his business clients to include family members in tax preparation meetings.

“While the goal of the tax preparation meeting is to prepare the returns and ensure they are in compliance with all federal, state, and local regulations, it also provides an opportunity to educate family members and prepare them for the future,” Zinman told Advisors Magazine.

When Zinman and his team meet with clients, they focus on a variety of financial issues such as estate and retirement planning, savings, funding education, life and disability insurance, as well as the clients overall financial goals.

If the client happens to be a family business, the meeting is an opportunity to discuss transition and succession planning. It serves as an opportunity to discuss the vision the client has for their company and for family members to learn how they fit into that vision going forward. These meetings are also a good time to identify any areas of conflict and proactively work to resolve them, according to Zinman.

But the meeting with family members shouldn’t be a one-off, according to Zinman.

“By having these meetings regularly, family members feel informed and included, and it is an important step in aiding our clients so that their legacy remains intact for future generations,” he said.

It’s been the experience of Chris Morgan, vice president and senior portfolio manager at Florida- based Members Trust Company, that meetings with family members can help avoid confusion about finances.

Morgan’s advice, share even the basic details of finances with family members because sometimes assets are spread between multiple banks, credit unions, and brokerage departments. This information would help avoid discrepancies in knowledge about financial affairs between the person primarily responsible for the family’s finances and the rest of the family.

“A common solution is to simplify the family’s financial situation by consolidating assets to a trust company such as MTC, where those insurance limits are irrelevant given that our client’s balances could not be compromised in any amount if MTC were to become financially insolvent,” Morgan told Advisors Magazine.

The team at MTC asks simple questions about the involvement of various family members because those members will feel a greater sense of ownership, understanding, and engagement when the time comes to become stewards of those assets for the family, according to Morgan.

MTC often partners with advisors and trust officers at credit unions to offer trust and investment services to credit union members. The growth in MTC’s assets under management from about $50 million in 2004 to over $4.3 billion today is due to clients consolidating their assets to MTC over time.

Perhaps there is no better time to talk about a family’s finances given the recent Gallup poll that found Americans are more pessimistic about their finances thanks in part to rising inflation and higher energy costs.

Forty-six percent of U.S. adults, down from 57% last year rate their financial situation as either “excellent” or “good” while 38% describe their financial situation as “only fair” and 16% describe it as “poor”, according to the Gallup poll released April 28.

Thirty-seven percent say their financial situation is getting better while 48% say it’s getting worse, according to the poll.

Gallup, a global analytics firm surveyed 1,018 adults aged 18 and older living in all 50 U.S. states and the District of Columbia. The findings are from Gallup’s annual Economy and Personal Finance poll that was conducted April 1-19, 2022.